Leveraging Human Capital: Are Your Employees Getting Enough Sleep?

Human capital refers to specific employee characteristics that can make a business successful. Traditionally, industrial-organizational psychologists have used the acronym “KSAO”, which stands for knowledge, skills, abilities, and other characteristics, to classify an employee’s work-related capabilities. When these KSAOs are useful for an organization’s overall economic outcomes, they are considered human capital.

Organizations often use sophisticated selection systems, or elaborate training programs to make sure that their employees have the right type of human capital that can make them economically successful. But just because the employees have the “right stuff”, does not mean that business outcomes are determined. Organizations also must find ways to harness the power of their human capital and get the most out of it. For example, if an organization pushes employees to work harder, it might think that it is spending more of its human capital—getting more bang for its buck.

HUMAN CAPITAL LEVERAGING STRATEGIES

Researchers are aware of the tendency for organizations to try to squeeze more out of its employees, and ostensibly get more out of its human capital. They call these efforts human capital leveraging strategies. But do they work? An organization that pushes its employees to the extreme may be leveraging human capital, but is this really an effective strategy that will lead to better business outcomes? Researchers (Barnes, Jiang, & Lepak, 2015) have released a new model based on existing research studies that predicts what happens when organizations try to squeeze a little more out of their employees.

ARE EMPLOYEES GETTING ENOUGH SLEEP?

The authors discuss five different strategies that businesses use to get the most out of their human capital. While they agree that these strategies may initially enhance team performance and provide an initial boost in productivity, they caution that these same strategies may lead employees to get less sleep (in terms of time), and worse sleep (in terms of quality) at night. Sleeping problems are associated with many negative workplace outcomes, such as bad moods, “cyberloafing”, decreased productivity, and more unethical behavior.

These are the five strategies that may eventually lead to disrupting employee sleep:

Extended shifts: With longer shifts, organizations get more labor out of their preexisting workforce. Longer shifts also mean less time off the job, and fewer hours to sleep. Long hours may also more readily contribute to irrecoverable exhaustion.

Night shifts: When companies keep working through the night, they add to the hours of money making. Yet night shifts are notorious for disrupting circadian rhythms and employee sleep.

Schedule instability: Organizations may rotate employee through different time shifts, especially if there are some shifts at undesirable times. These changes may help maximize working hours for the organization, but the changes can wreak havoc on employee sleep patterns.

Norm for work over sleep: An organization might communicate the message that they value when their employees work long hours and forgo sleep. For example, an employee might be praised for work emails sent at 1am. Sleep will be compromised under these conditions.

Norm for constant connectivity: Organizations might urge employees to be constantly connected to their work email or smartphone. Sleep will be compromised when work intrudes on an employee’s time off.

ORGANIZATIONAL IMPLICATIONS

The authors expect all five of the above techniques to lead to short-term productivity. This is not surprising. After all, each of these techniques leads to employees working more hours and sacrificing their personal time. Any organization that works employees harder with disregard for their health and well-being will probably notice a quick uptick in business success. But in the long run, this strategy is doomed to fail. Human capital is just as much “human” as it is “capital”. Organizations that do not consider how their policies affect the health and well-being of their employees will not be able to get the most out of these employees in the long run. If your policies are making your employees sleep deprived, you can expect long-term failure.

Will Being an Average Performer Prevent Employee Victimization?

There has been a surge of interest in research on employee victimization in the last few years, both because the phenomenon is on the rise and because of the negative effects it has on both a personal and organizational level. Employee victimization has many causes and takes many forms, from aggressive incivility and bullying to general mistreatment.

Although previous studies investigated the situational and personal factors that precipitate victimization, little research has been focused on the behaviors that may lead to someone getting targeted.

THE VICTIMIZATION OF HIGH & LOW PERFORMERS

The research paper under review looked at the extent to which high and low performers may experience victimization because of their performance. Attention was paid to the factors that influence different performance levels, which in turn leads co-workers to punish the victims in different way. The researchers also examined whether this victimization would affected later performance, and in what way. Their findings showed that those people that were on either end of the performance spectrum outside norms for their group were more likely to be victimized. When employees perform well, they may be perceived as a threat and make others look bad, and so they’re mistreated. But when one under-performs and fails to contribute to overall group performance, they too will likely be victimized.

DIFFERENCES IN EMPLOYEE VICTIMIZATION TACTICS

The research also highlighted the different forms that employee victimization may take. With low performers, the treatment they get will be more overt “in-your-face” aggression, such as being yelled or sworn at. This may be because of co-workers feeling resentment against freeloaders, and their frustration at the effect their colleague’s lack of contribution has on overall team performance.

High achievers are more likely to experience covert and subversive forms of victimization, such as being ignored, resources being withheld and co-worker sabotage. This may be because of feelings of envy or inferiority, as well as the fact that high performers may highlight other member’s shortcomings. An important factor that was noted, which affected certain outcomes, was the victim’s feelings of entitlement or benevolence. With low performers this had little effect, but when high performers had a sense of entitlement– such as disregarding others and being self-serving in goal attainment– more overt forms of aggression were more prevalent. Those high performers who were more team-oriented and benevolent in their actions didn’t experience these blatant forms of aggression.

THE BIG TAKEAWAYS

These initial results aren’t necessarily a reason to accept average performance in the workplace. But they are particularly useful in being able to better predict victimization, which may help improve risk assessments and targeted prevention strategies.

Despite their limitations, these findings also highlight the need to look at how performance appraisals and incentives are given as well as how high and low performers may be dealt with to reduce victimization.

Employee victimization has the potential to seriously affect teamwork co-operation and productivity, and is therefore a critical issue to address at the organizational level.

Reaping the Benefits of Diversity Training

Researchers have long touted the benefits of diversity as a means to improve project productivity. But how can organizations achieve these beneficial outcomes using diversity training?

Studies show that diversity within organizations (including gender, ethnicity, knowledge, skills, etc.) can ultimately lead to both positive and negative outcomes. On the positive side, organizations can benefit from having a larger applicant pool and customer base, improved capacity for creativity and innovation, and higher customer satisfaction. But diversity has also been shown to increase absenteeism, conflict, and discrimination lawsuits, reduce revenue, and lower morale.

For better or worse, diversity training– a course of instruction aimed at increasing the participants’ cultural awareness, knowledge, and skills in order to benefit an organization– plays a key role in determining the impact diversity has on the company.

The most influential components of diversity training are the characteristics of the participants, trainer, training environment, and training design. The authors of the current study suggest that diversity training is most effective when it is active (e.g. role playing, simulations, games); involves social interaction; is conducted in person by a trainer from within the organization; spans multiple sessions, each lasting a minimum of 4 hours; focuses on a single diversity attribute (e.g. race, LGBT, disability); and has a diverse group of trainees.

Under optimal conditions, effective diversity training can have a beneficial impact on employees’ knowledge and thought processes, behavior, perception, attitudes, and self-efficacy about diversity. These better outcomes allow organizations to reap the benefits of diversity and avoid the consequences resulting from the absence, or poor implementation, of diversity training.

In the end, “A meta-analytic evaluation of diversity training outcomes” provides a greater understanding of how diversity training characteristics interact, and explains their potential to benefit (or harm) organizations. With this information, trainers and managers can design and execute diversity training seminars more effectively, with an end result of maximizing optimal organizational outcomes.

The impact of creativity on firm performance depends on the riskiness of a firm’s strategy, the firm’s size, and the ability of the firm’s employees to transform creative ideas into new products and services, according to a study by Yaping Gong, Jing Zhou, & Song Chang. When a company has a risky strategy, creativity leads to decreased firm performance. On the other hand, creativity leads to increased firm performance when the size of the company is small or when a company has a high capacity to transform creative ideas into novel products and services (a.k.a., absorptive capacity).

In their study, Gong, Zhou, & Chang collected data from 148 high-technology firms in China that had 100 or more employees and operated in sectors such as telecommunications and biotechnology. In regard to indicators of creativity, sample items included “[the core knowledge employees, such as engineers] generated novel, but operable work-related ideas.” For firm performance, the firms’ CEOs rated their companies along dimensions such as profit, sales growth, and market share. As rated by the CEOs, items such as “we search for big opportunities, and favor large, bold decisions despite the uncertainty of their outcomes” served as indicators of riskiness orientation. Number of employees served as the measure of firm size, and sample items such as “our [core knowledge employees, such as engineers] can easily implement new products and services” served as indicators of realized absorptive capacity.

When Retailers Screw Up: How Can they Win Customers Back? (IO Psychology)

Retailers aren’t perfect. When they screw up, how do they try to get you to fall in love with them again?

Science to the rescue! In this study, researchers investigated customers’ spending after filing of a customer service complaint to a grocery retailer. Some customers received a coupon after complaining. Some didn’t. Some customers received a quick response from the retailer. Others received a slower response. Overall, they found that those who received the coupon actually spent less after filing their complaint, and those who received a quick response spent more in the time following.

Upon further digging, they found that for customers who received a slower response, the coupon made a big difference; a slow response AND a coupon reduces future spending greatly. This tells retailers to respond quickly to all customer complaints. However, if you can’t respond fast, giving a coupon may hurt your bottom line even more.

When you think about a coupon versus a quick response solution, it makes me think of being in a relationship. Ladies, when your man screws up, he might immediately apologize. He might buy you flowers. He might do both. (He might do neither; let’s be real.) If he chooses to buy you flowers, but never apologizes, you constantly look at those crappy, unattractive flowers as the cheesy substitute “thing” you got… the thing that now represents his second mistake. The flowers represent what you really wanted but didn’t get: your man immediately owning up to his mistake and sincerely apologizing for it. The flowers become undesirable in your eyes. Unhappy customers see the coupon as a reminder of being treated like crap.

But when your man immediately owns up to his mistake, apologizes, and you talk it through, ladies feel better. They feel listened to; they feel their point of view matters; they feel understood, attended to, and cared for. (This is starting to sound like a Lifetime movie…) It’s the timing and the care that matters, and this treatment impacts how you feel and act going forward.

This is a common “how” versus “what” scenario. The “how” you treat me is much more important that the “what” you give me. Coupons don’t fix the mistake. When not apologized for in a timely fashion, they represent the mistake. And they don’t help.

So apologize. Quickly. (And white tulips certainly don’t hurt…!)

Good Stats Make Us Uncomfortable (IO Psychology)

In striving for profitability, companies often rely on key indicators of organizational performance. Common indicators like sales growth, customer loyalty, and earnings per share often guide strategy decisions and resource allocation. But sometimes key indicators may not be that “key” after all. They may have little or no true connection to profitability.

Organizations might not be aware of this and continue to rely on these same measures because they feel as though they matter. Their intuition overrides everything else and as a result they don’t do the due diligence to determine what actually leads to profit. They become overconfident, grab onto any numbers that are easily available, and rely on things they have always looked at in the past. They choose what they like and what feels comfortable. But they don’t actually analyze. So how can we know if something truly predicts value? We cannot leverage something we don’t know.

This article focuses on identifying indicators that serve as true statistical predictors of value. The author emphasizes that for an indicator to be truly connected to value it must be both predictive and persistent. Indicators that are predictive demonstrate a statistical link to value; a link strong enough that we feel confident saying there is a connection that has meaning and is not due to chance. Indicators that are persistent stand the test of time; they reliably show that that an outcome is controlled by applying skill or knowledge, and is not random.

The author advocates several steps in selecting the best indicators of organizational performance. These steps include defining a clear business objective, developing theories to determine what measures might link to the objective, and statistically testing the relationship between the measures and the objective.

As I read these steps they made complete sense to me, but my data-happy left brain went nuts, thinking about others questions that should be considered. Like: “What else do we already measure?…Could it matter?” and “What else can we measure?…What else should we measure?” and “What other viewpoints are we not taking into account?” and “What curveballs could come our way?”

Sometimes a meaningful statistic can push us out of our comfort zone. Actually, sometimes a meaningful statistic should push us out of our comfort zone. It might not make automatic, inherent sense to us, especially at first. If all statistics made complete, gut-happy sense to us we wouldn’t need them. We could always rely on our intuition because it would always be correct. But statistics are useful because they not only tell us how meaningful things might be related; they can surprise us with the sheer fact of what things might be related.

If a predictor of success isn’t pointing in the direction of success, it’s not a predictor. It’s simply a number. And a useless one at that.

Sometimes you have to give more to get more. The same is true when it comes to how CEOs lead their company and how well their company performs. According to Peterson and her colleagues, when the CEO (usually the most powerful and influential player in the organization) demonstrates servant leadership their firm becomes more successful.

Recently, organizational research, in combination with business strategy, has shifted its interest to study how the more relational styles of leadership have an impact at the organizational level. In this study, servant leadership was the style of choice and is defined as leading by placing a heavy weight on personal integrity, caring for the needs of followers, and having a “strong moral compass.” Peterson and colleagues not only wanted to see the organizational outcomes of servant leadership, but also to understand what determines this leadership style.

After sampling 126 CEOs from the technology industry, the researchers found that narcissism negatively predicted servant leadership, and founder status (whether the CEO founded the firm) positively predicted servant leadership. They also found that these two characteristics were mediated by organizational identification—whether a CEO sees his or her identity as being synonymous with the identity of the organization. As for firm performance, servant leadership positively predicted return on assets, meaning that there is a relationship between leading by valuing others more highly than oneself and organizational performance.

Of course, the most obvious practical implication is that the non-narcissistic, founding CEO who highly identifies with his or her organization and displays servant leadership will be more successful, but there are other important points to note. As the authors suggest, having leaders at any level share a “we” mentality over a “me” mentality will help leaders at any level develop more servant leader behaviors. Also, knowing what kind of characteristics to look out for will be helpful to anyone involved in the decision-making process in promoting or selecting new leaders for the future.

Organizational justice, or how fairly an organization treats its workers, is a big deal to employees. To an individual employee, organizational justice helps determine his or her attitude about the job and as well as his or her productivity. But this perception doesn’t exist in a vacuum. Because this perception is often shared with co-workers and team members, called justice climate, Whitman and his co-authors conducted a meta-analysis to summarize and clarify how organizational justice climate exists at the team (unit) level and can influence team effectiveness.

Being an ambiguous term in itself, Whitman et al. defined effectiveness as having four main parts: attitudes (e.g., job satisfaction), processes (e.g., citizenship), withdrawal (e.g., turnover), and performance (e.g., profit). They predicted that a more positive justice climate at the team-level means that workers would be able to trust their leaders to a greater extent, which would result in the team achieving more group goals. The authors also predicted that the different parts of organizational justice, distributive (i.e., how fair rewards are to input), procedural (i.e., how fair company policies are), and interactional (i.e., how fair workers are treated interpersonally by their managers), would be related to the components of effectiveness in different ways.

Using 37 studies that totaled 4,600 teams (units) with 11 employees per team on average, the authors discovered that the mean-corrected correlation between justice climate and effectiveness was .40—this means that how fair the team perceives the organization to be overall, the more likely they are to be effective. As for the separate pieces of organizational justice, the authors found that distributive justice has a stronger relationship (than the other two justice climate types) to both performance and attitudes. This means that the rewards have to be judged as fair when compared to the work performed by the team. Procedural justice had the strongest relationship with how often team members are absent or turnover. And last but not least, interactional justice had the strongest relationship with process effectiveness—teams are unlikely to go above and beyond if they do not view their interaction with leaders as fair.

So, noticing that your team’s performance has leveled off or team attitude and morale is spoiling? You have to make sure you’re seen as being fair. Also, keep in mind that you should not just focus at the individual perception of fairness, you should also focus on making sure rewards are appropriate for the team, team-level policies and procedures are fair, and they have treat each team equitably in their day-to-day interactions.

When an organization wants to improve customer retention and therefore its profitability, it will often turn to marketing. But could HR provide another option? In this study, Towler, Lezotte, and Burke (2011) tested a model of the way in which service climate (conceptualized and measured by concern for employees and concern for customers) affects profitability.

The authors hypothesized that showing concern for employees would lead to employees showing concern for customers, which in turn would lead to customer satisfaction. Satisfied customers are more likely to return, so customer satisfaction was predicted to lead to customer retention, which in turn was predicted to lead to store profitability. This model was tested using a huge sample of over 12,000 employees in 1,500 tire retail/vehicle service stores. The authors found full support for the model.

The results of this study indicate that if you want your employees to show concern for customers, you must first show concern for your employees. Their subsequent showing of concern for customers leads to more satisfied customers, who in turn become repeat customers, and that means profitability. Marketing therefore is not the only group that the organization should turn to for advice on customer retention – they should look to HR as well!

It is widely acknowledged that human capital is important, but does it matter whether the capital is generic (transferable to other organizations) or unit-specific (valuable to that particular work unit and not to others)? In this article, Ployhart, Van Iddekinge, and MacKenzie (2011) assessed both generic and unit-specific human capital in a large fast-food organization. They created and tested a model for how the two kinds of human capital relate to each other and to performance and effectiveness outcomes.

The level of generic human capital was based on the cognitive ability and personality of hired applicants, while unit-specific human capital was based on employees’ additional training. The authors found that changes in generic and unit-specific human capital were positively related over time; that is, as generic human capital increased, so did unit-specific human capital. In addition, changes in unit-specific human capital were positively related to changes in unit service performance behavior (efficiency, service, quality), and changes in unit service performance behavior were positively related to changes in unit service effectiveness (unit financial success).

In other words, hire employees who are smart and whose personalities fit with their jobs. This will establish strong bench strength and will set the organization up for success as employees are trained to build the skills necessary to excel in specific roles.